From the Wall Street Journal ($): Some of the devils in the details:
Capital Gains: “For lower-income taxpayers, lawmakers cut the 10% capital-gains rate to 5% and eventually zero in 2008. The new plan doesn’t make any changes in the basic rules for deducting capital losses -- a subject many readers have complained about in recent years.
Child Tax Credit: “For this year, the increased amount of the credit will be paid out in advance, starting in July, based on information in a taxpayer’s return for 2002.But many people won’t get anything because of current income limitations that won’t change under the new plan.... The general rule is you lose $50 of your child-tax credit for each $1,000 (or part of $1,000) that your adjusted gross income exceeds the applicable threshold, says Martin Nissenbaum, national director of personal income-tax planning at Ernst & Young. Consider a family with two children under 17 and income of $150,000. Because of this limit, the couple wouldn’t qualify for the tax credit at all, he says. Another example: Suppose a married couple has two children who qualify and thus they assume they will get a $2,000 credit. But this couple has adjusted gross income of $140,000. The excess above the threshold would be $30,000, which means a reduction in the credit of $1,500, leaving a credit of only $500, Mr. Nissenbaum says.”
Alternative Minimum Tax: “Earlier this month, the Treasury Department said about 2.3 million people were affected by the alternative minimum tax last year. Even with the new plan’s changes, the number of people hit by the tax is projected to rise sharply each year through 2010. Thus, pressure will intensify in coming years on Congress to take major action.”
Stealth Taxes: “Much to the chagrin of many taxpayers, the new plan doesn’t make any changes in two heavily criticized “stealth” taxes -- the personal-exemption phaseout and the limitation on itemized deductions. These raise revenue for the government without changing the posted tax rates. Congress approved them years ago because lawmakers were confident they would attract less voter wrath this way than raising tax rates directly. Thus, these changes have been dubbed stealth taxes.Part of the 2001 tax act calls for gradual phase-outs of these provisions. But those phaseouts aren’t scheduled to start for several years.”
